Some Fidelity Investors Won’t be Hit By Minimum-Balance Fees

Fidelity Investments decided this week that it will not charge an annual fee to clients with low account balances if retail assets for their households total at least $100,000 or they have recently opened a retirement account, a company spokeswoman said today.

The fee has been criticized by industry observers who say fund complexes shouldnt charge investors for low fund balances when declines may be the result of poorly performing markets. In an interview today Fidelity refused to comment on its investors reaction to the minimum-balance fee.

But the firm counters that fees for low balances have been in place at the complex for years and that the such measures are necessary because large numbers of accounts with low balances are costly to manage and drive up costs for all investors. "If the costs go up for providing services for the fund, it affects everybody in the fund," Crowley said. "Its a fairness issue for shareholders."

But Fidelity decided this week that investors who have opened new retirement accounts or maintain accounts with at least $100,000 in retail assets are not subject to the fee. Even though those investors might hold some accounts that have dipped below the $2,000 mark, their larger accounts will offset any higher costs, Crowley said.

"Its recognizing that theyre doing a considerable amount of business with us," she said of the decision.

Fidelity currently charges investors an annual fee of $12 should their account balances dip below $2,000, said spokeswoman Anne Crowley. Earlier this year the firm lowered the minimum balance investors needed to maintain in order to dodge fees from $2,500.